Overwhelmed by stories of fundraising, pitches, startups, incubators and the frenzy of hackathons, we often forget that the vast majority of the entrepreneurial phenomenon is in fact fairly mundane and banal. Well banal, in a way. Let’s say that the heroism of some entrepreneurs is far from the kind we hear and read all the time in the media. Nothing illustrates this better than the story of Madame Tao, which seems to have come out of a fairy tale.
Tao Huabi was born poor in China. Poor in China, that is to say really very poor, so much so that she barely learned to read and write. At 20, she got married and moved to another province. After a few years, her husband died suddenly. She found herself alone, in the streets, with two young children. The only thing she knew how to do was cooking. Not the haute cuisine; Rice, vegetables, with some sauce from her province. Luckily, she was right next to a large school. She could make rice bowls for students at noon to survive. And survive she did. She offered low prices, did not hesitate to give free bowls and quickly became very popular among local students who affectionately called her Gan Ma (godmother).
With a little money, she could open a restaurant. ‘Restaurant’ meaning here a few tables on a parking corner. She served only a noodle dish, which she seasoned with her spicy sauce, made from an old recipe from her province. Big success. But one day she ran out of sauce. Her customers refused to eat her noodles. She realized that it was her sauce they really wanted. Moreover, more and more customers were asking her to put some sauce in a small bowl to use it at home.
She was surprised that some customers came to her place only to buy the sauce, so she decided to sell it separately. She gave some for free to truck drivers who came to eat at her place, who then talked about it all over.
Madame Tao eventually closed her restaurant and opened a factory to produce her sauce, which she called Lao Gan Ma (old godmother). Today, after many twists and turns, her factory produces for the whole world, and generates $190 million of turnover. She is a star in China, and should be everywhere else. I have a pot of Lao Gan Ma in my cupboard and it’s delicious.
This story illustrates the five principles of effectuation, the logic of entrepreneurs:
- Start with what you have: Stop crying over what you would like have; look instead at what you have, even if it is not much, and ask yourself what you can do with it. Madame Tao knew very little. She knew how to cook rice, so she started with that.
- Think in terms of affordable loss when acting: Do small things, because at least you can do them right away without asking anyone’s permission and taking too much risk. Cooking rice wasn’t much, but it was enough to get Madame Tao going. She survived thanks to it and could imagine new things based on that.
- Create a crazy quilt: Ask for help and learn to rely on others. Being loved by poor students meant there were many people ready to help Madame Tao. She was also popular among truck drivers who developed word of mouth for her restaurant and here sauce. Her advertising budget could be zero thanks to that.
- Take advantage of surprises: Madame Tao was surprised that the customers wanted the sauce, not the noodles, but acted on the surprise and offered her sauce alone.
- Be the pilot in the place: Being thrown to the streets meant Madame Tao could have been condemned to a life of begging. But she didn’t leave the circumstances impose on her. She did something simple (rice cooking) but that was enough to set her to a path of survival and then amazing success.
This story shows how entrepreneurship can be a great tool for liberation and emancipation, especially for the poor and needy, for those who are abandoned by the system. Unable to read or write, Madame Tao had no chance of finding a job in a company.
But the lesson goes beyond: I often use the example of Madame Tao with managers confronted with the difficulty of transforming their organization and who explain to me that “at their level they cannot do anything”. If Madame Tao, who started in the worst possible conditions, could do as much, what about a manager who has huge tangible and symbolic resources? Of course the situations are different, but still. To quote a beautiful quote from the philosophical tale that is… the Ratatouille movie, “Not everyone can become a great artist, but great artists can arise from anywhere.” This formula can be applied to entrepreneurship, but also to leadership.
Perhaps the example of Madame Tao, and that of so many other brave individuals, can help us get out of this learned helplessness that strangles organizations today. Madame Tao, in essence, tells us, “It’s not about the others; it’s about you,” and she gently sends the ball to our court and tells us, “It’s your turn to play.”
To know more about effectuation, read my article here.